Audio 3:54
Fairfax to sack 550

Brendan TrembathUpdated
Wed 25 May 2011, 6:24 PM AEST

Fairfax Media has announced plans to slash 550 jobs as part of a 'business improvement program'.

Transcript

ELEANOR HALL: One of Australia's biggest media companies is preparing to sack 550 of its employees as part of what it says is a "business improvement program". Fairfax Media's announcement that it will cut about five per cent of its workforce has shocked many employees who are in the process of negotiating with management over a new enterprise agreement.

The company's Chief Executive David Kirk said the group needs to be "lean and agile" in a modern media world. But the Journalists' Union has condemned the job cuts, saying they will affect the quality of journalism.

Brendan Trembath has our report.

BRENDAN TREMBATH: The company has tried to break the news gently. In a one page announcement to the stock exchange Fairfax Media calls its latest move a "headcount reduction". In simple English it means job cuts.

About 550 employees will go in Australia and New Zealand, roughly five per cent of the full time workforce.

DAVID KIRK: This is a wide ranging program across many of our businesses. It affects corporate and group services; it affects a wide range of our businesses in the Australian publishing and printing area.

It affects Fairfax New Zealand. The program will deliver around 50 million in annualised cost savings, around 25 million of which of the savings will flow in the 2009 financial year.

DAVID KIRK: A good deal of the cuts are in the newspaper production area. It's journalism in the sense that it's subediting the paper, an important component. But we do believe for a range of structural and other reasons that we can be more productive and it'll have absolutely no impact on the quality of the papers.

BRENDAN TREMBATH: Reporters were invited to listen in on the conference call but could not ask questions. And the company did not immediately schedule a news conference. But this analyst did ask one of the questions which would have been on reporters lips.

CONFERENCE CALL OPERATOR: Your next question comes from the line of Fraser McLeish with ABN Amro.

FRASER MCLEISH: Thanks very much, just a quick one from me. Just what are you thinking in terms of likely industrial action and are you expecting big disruption?

DAVID KIRK: No we're not. We clearly it's not within our control but we have a very constructive and open relationship with the staff and we've communicated directly with them.

BRENDAN TREMBATH: Fairfax staff expected the company would announce a round of redundancies. But the timing is a surprise because Fairfax Media has been negotiating a wages agreement. The Media Entertainment and Arts Alliance has branded the planned job cuts as short-sighted.

The union's Federal Secretary Chris Warren was on his way to a meeting to discuss the redundancies.

CHRIS WARREN: This sort of cuts by corporate management at one of Australia's largest companies is going to have a very serious affect on the quality of the journalism that's produced by the company's papers and websites and magazines.

BRENDAN TREMBATH: Will it result in industrial action?

CHRIS WARREN: I think it's a bit early to tell that stage. I think the really important question here is the sort of damage this is going to do the company for a bit of short term benefit a bit of short term cost saving.

BRENDAN TREMBATH: Chris Warren the company though says it needs to be lean and agile in a modern media world. Many companies trim staff, what's wrong with this?

CHRIS WARREN: Well I've got absolutely no idea what the company actually means by that. You can't produce the sort of quality product that are so essential in this day and age by cutting costs. Don't take my word for it. What's Rupert Murdoch doing? He's not engaging in these sort of short-sighted cost cutting measures.

He's investing in journalism and it's only by investing in journalism that companies can position themselves for the long term.

BRENDAN TREMBATH: While Chris Warren is not impressed, the job cuts announcement was welcomed on the stock market. Fairfax shares rose more than 2.5 per cent in morning trading.